Keeping people on unemployment helps them get jobs?

By Rebekah Rast — Remember back in 2010, when House Minority Leader Nancy Pelosi claimed that unemployment benefits create jobs faster than most any other program?

To jog your memory, Pelosi said: “It injects demand into the economy.  It creates jobs faster than almost any other initiative you can name.”

It seems the Congressional Budget Office (CBO) backs her statement in a new report.  The report says this extra spending would lead “to more consumer spending and increased demand for goods and services, which CBO expects would boost overall output and employment in the short term.” To extend benefits another year would cost the government (taxpayers, that is) $30 billion.

Associated Press (AP) reporter Sam Hananel also highlighted that extending the long-term unemployment benefits for another year would “add 300,000 jobs to the economy.”

Before anyone gets giddy with excitement over this good news and seemingly easy fix to the nation’s woes, NewsBusters points out one very important caveat:

“Even if true, neither the CBO, nor the Associated Press in covering the report, noted that this result works out to a cost $100,000 per job.”

Does unemployment insurance lead people to find six-figure paying jobs?  Likely no, which means the government (or taxpayers) will lose money with each added job.   After years of extended long-term jobless benefits already, it would seem the still staggering economy and high unemployment numbers would be proof enough that extending these benefits even more might not be the best solution.

After all, rolling back unemployment insurance to its normal 26-week time period would save the government $80 billion.

Already in the past five years, jobless Americans have collected $520 billion—about half a trillion dollars—from state and federal unemployment insurance programs.  Now Congress will decide whether or not to extend the deadline to file for these benefits beyond this year as part of its fiscal cliff negotiations.

But saving money isn’t really the theme of this administration.  Therefore, it keeps spending.  And when that doesn’t work, it spends even more.

In 2011, White House Press Secretary Jay Carney, explained, similar to Rep. Pelosi, why unemployment benefits are so positive for economic growth:

“It is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren’t earning a paycheck are going to spend the money that they get.  They’re not going to save it; they’re going to spend it.  And unemployment insurance, that money goes directly back into the economy dollar for dollar virtually.  So it is — and when it goes back in the economy, it means that everywhere that those people — everyplace that that money is spent has added business.  And that creates growth and income for businesses that then lead them to making decisions about job — more hiring. So there are few other ways that can more directly put money into the economy than providing unemployment insurance.”

This sinking ship of handing out money to those just so they’ll spend it is a vicious cycle that will never end and creates an unhealthy dependency on the government.  It doesn’t solve nor does it get to the root of the problem.

A much more positive and proven way to get people to invest in the economy with long-term results is to get them hired.

The perverse effect of extended unemployment benefits is it further displaces people out of the workforce.  After all, when you can get something for free, why work for it?

“The sad fact is that no matter how well intentioned, Obama’s unemployment benefit extensions have locked people into a near-permanent state of dependency, which will be very difficult for them to recover from,” says Bill Wilson, president of Americans for Limited Government (ALG).

NewsBusters concludes its analysis on the CBO report pointing out the “twisted logic” of this administration.  “Since the government has been ‘stimulating’ the economy to the tune of about $5 trillion in deficits during the past four years, … the CBO’s twisted ‘logic’ would predict that the economy should have created 50 million jobs by now. Note that this hasn’t happened.”

And further spending on unemployment insurance isn’t going to change that fact.

Rebekah Rast is a contributing editor to Americans for Limited Government (ALG) and NetRightDaily.com.  You can follow her on twitter at @RebekahRast.

  • shamu9

    These People DON”T even Think about getting a JOB!

  • http://CoSy.com/ Bob Armstrong

    Money for nothing increases properity .

    What an astounding brain damaged thought . WPA was brilliant by comparison .

  • http://www.facebook.com/jwatersphd James H Waters Phd

    Why not just have those lazy bums killed? Isn’t that your basic orientation, Rebekah? What really are these folks supposed to do? There aren’t any jobs. Your callousness amazes me, way beyond that of even Bozeman, Manning or even your Chamber of Commerce mentor. Maybe you really believe there are a lot of jobs out there and these people are just sitting around collecting unemployment instead of taking them. You might want to check – there are not. I gather you favor just cutting them off entirely . . . then they can live on the street, and die on the street, along with their families. That will motivate them to find the jobs that are not there. I just don’t get what you are thinking . . . and, at the same time, I’m sure you’re unalterably opposed to any billionaire having to part with a marginal amount of additional taxes to support those who have nothing, and gung-ho for yet another billion dollar weapons scheme we don’t need. You really ought to be ashamed.

  • Mark

    People that truly need should get help. Too many aren’t trying. Is the economy bad? Yes. And this president couldn’t care less or have a clue. Keep spending until we’re all in dire straits. If we spent our money wisely there would be plenty for those in need. But it’s easier to accuse others of wanting to kill people and try to silence them. That helps create rational debate.

  • Jean

    It is a known fact that a lot of people on unemployment payments do not look for a job until the last months of payment. High earners search for a job from the begining of lay-off. Giving long term welfare does not produce graditude from any group of people. Nor does it produce someone who will try to better their position most of the time. We have a lady in our town who started caring for women and children whom were in bad situations. She took them in her home, helped them find ways to learn skills so they could support themselves some day. Everyone there had to help out by baby-sitting, running the house etc. No one was given a free ride, and was asked to leave if they didn’t help the group. Us citizens in surrounding cities have donated money to her cause for years and she now has another lot and home built that can house 12 familes. No goverment help, and her success rate is great! Those familes do appreciate the help they recieved because they also contribruated to their own success.

  • Jean

    This administration reminds me of teenager with an un-limited credit card.

  • mindtrapper

    That’s stupid logic, and it’s also a deliberate excuse to for Obama to keep getting as many people dependent on the government for subsistence as possible… Why? So they will continue to vote for the Progressive Demo Party, to keep the hand-outs coming in…

    It’s been 4 years…and Obama has done nothing to increase tax revenues by the only way that will cut entitlement spending AND reduce our national debt… create an environment that will product private sector job growth.

    When a person collecting entitlement payments- welfare, food stamps, and unemployment is hired by a private sector company… they earn a wage, from which they pay income tax, FICA, etc, plus the govt stops having to use tax dollars to support that person.

    So not only does that person gain the self-esteem that comes with having a job… They are now adding money TO, instead of subtracting money FROM, the tax base.

    Increasing tax revenue by simply raising taxes, does NOT decrease entitlement spending, and does NOT grow the economy.

    We could raise taxes on not just the top 2%, but every person currently employed, (which will happen next year, no matter what Obama is saying), and it would do nothing to grow the economy.

    On the other hand, if we increase tax revenue by expanding the tax base, (private sector job creation), this will automatically decrease entitlement spending… without having to “cut” entitlement spending… Each private sector job expands the tax base, AND reduces the entitlement funds provided to one person.

    This “double advantage” that private sector job growth provides is why its the fastest, and ONLY way to grow our economy and heal America…

    The government must foster an environment that encourages private sector businesses to start hiring again.

    Anybody with half a brain can understand the logic.

    Obama is a highly intelligent man, yet he wants to increase tax revenue by just raising taxes.

    It won’t matter if he raises taxes on the “rich”, or on everybody with a job (which he WILL do in 2013), it will do nothing but bring in a little more money that will be used to pay for the steadily increasing entitlement spending.

    In the last 4 months, the Obama administration has already created over 5000 new govt regulations for private sector business… regs that choke down even more, America’s economic lifeblood, small businesses… and will lead to even more lay-offs.

    It’s a nightmare scenario that is literally, destroying the country that most Americans, of every political affiliation, love and cherish.

    And the tragedy is that our our economic demise can be turned around. The government can easily eliminate the regulations that are strangling business in this country… can unshackle and free up the most powerful economy in the world.

    So far, Obama’s policies have had the opposite effect… It’s not “coincidental incompetence” either… Obama is too smart, and it’s been going on too long.

    Can somebody tell me why Obama has done so little to stimulate private sector job growth in America?

    This economy is ready to take off… yet all Obama wants to do is raise taxes???

    Does Obama really want to lower unemployment and put people back to work… or does he, as his actions suggest, want to make more and more people dependent on the federal government for subsistence… in essence, turn more people into government slaves?

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